Skip to main content

At what point does the law consider an estate insolvent?

Ferrum, VA |

My mother left all her personal and household property to be divided equally between the heirs. She bequeathed/devised her real property to the four heirs but not equally.. There is not enough assets from the household and personal property (tangible assets) to cover the debts & expenses of the estate. Is the estate insolvent? or is it only insolvent if the executor forces a sale of the real property to cover the debts & expenses from the proceeds?

Attorney Answers 1

Posted

No doubt of insolvency. You have laid down the definition of an insolvent estate. The executor has no choice in such a situation. They owe a fiduciary duty to the estate to act in a responsible, lawful manner. The executor must sell the estate and distribute the proceeds to the creditors in the correct priority, per statute.

This is not a simple matter. You will need an attorney. Paying the attorney is not a problem. They are paid out of the estate and they have a priority over most other creditors. Since you are not going to get anything out of the estate, except the executor's fee, an attorney will at least save you time and frustration. And the attorney costs you nothing, really. Good luck.

Don't forget to click on the "Best Answer" button, if you appreciate this wit and wisdom. This answer is not intended to create an attorney-client relationship and may not be relied upon as legal advice. A careful examination of the facts is necessary before a legal answer may be relied on. You should consult your own attorney before taking or refraining from any legal action.

Mark as helpful

1 comment

Charles Ross Smith III

Charles Ross Smith III

Posted

My answer assumes that the sale of the home will not bring enough to pay all the debts of the estate. If the proceeds of the sale of the home are sufficient to pay the bills of the estate, then the estate is solvent, but the home still must be sold, unless someone is willing to lend the estate the amount needed to pay off the bills without a sale of the home.